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Stocks climbed on optimism about interest rates.

Stocks rose Wednesday as investors interpreted the minutes from the latest Federal Reserve meeting as pointing to a more dovish stance on interest rate hikes. The Dow Jones Industrial Average(DJINDICES:^DJI) and the S&P 500(SNPINDEX:^GSPC) closed with modest gains.

Today's stock market

Index

Percentage Change

Point Change

Dow

0.24%

63.12

S&P 500

0.18%

4.94

Data source: Yahoo! Finance.

The materials sector led the market, with the SPDR S&P Metals and Mining ETF(NYSEMKT:XME) jumping 2.4%. Real estate stocks were laggards; the iShares US Real Estate ETF(NYSEMKT:IYR) fell 0.7%.

As for individual stocks, CVS Health(NYSE:CVS) announced a disappointing outlook and marijuana company Tilray(NASDAQ:TLRY) is expanding into the U.S.

Image source: Getty Images.

CVS faces challenges in 2019

Shares of CVS Health got hammered, falling 8.1% after it beat profit expectations for the fourth quarter but gave disappointing guidance as the company integrates its Aetna acquisition. Revenue, which was helped along by a little over a month of revenue from Aetna, increased 12.5% to $54.4 billion, a bit below the analyst consensus of $54.6 billion. Adjusted earnings per share came in at $2.14, above expectations of $2.05.

CVS' revenue forecast is ahead of what Wall Street was expecting, but profit in what the company calls a transition year will be disappointing. The midpoint of first-quarter revenue guidance is about 0.5% above the analyst consensus, and full-year guidance is above expectations by about 1.8%. But the company expects adjusted Q1 EPS to be between $1.49 and $1.53, missing the analyst forecast of $1.67, with full-year adjusted EPS of between $6.68 and $6.88, far less than the $7.41 Wall Street was modeling.

Besides challenges relating to the Aetna integration, CVS said it is facing headwinds, including a squeeze on profits by its pharmacy benefits management segment.

Tilray buys the world's largest hemp food business

Canadian marijuana producer Tilray is jumping into the U.S. hemp and cannabidiol (CBD) oil market in a big way, buying Manitoba Harvest from Compass Diversified Holdings(NYSE:CODI) in a cash-and-stock deal worth up to 419 million Canadian dollars. Shares of Tilray bounced 5.3% on the news and those of Compass rose 2.7%.

Manitoba Harvest is the world's largest hemp food manufacturer, and its products, including Hemp Hearts and Hemp Yeah! granola, are sold in over 16,000 retail stores in the U.S. and Canada. It also plans to launch a line of CBD oil and CBD-infused wellness products. Today's deal gives Tilray the opportunity to expand into the U.S. and take advantage of what is expected to be soaring demand for hemp and CBD products.

Compass owns and manages a diversified portfolio of middle-market businesses, each a leader in a niche market, and distributes their profits in the form of dividends, which currently amount to a 9% yield. Manitoba Holdings was its only subsidiary in the cannabis industry.

Author

Jim bought his first stocks in 1967 with paper route money and has been invested in equities ever since. He's still learning, though, and enjoys studying and investing in a wide variety of businesses. He has a BS and MS in electrical engineering from Stanford University, and retired after 34 years with a large technology company.